Half of US online adults are “Joiners,” people who interact with social networks at least once a month, according to Forrester Research.
Very few are decreasing the amount of time they spend on these networks, Forrester says in The Rising Potential Of Social Network Sites (Premium). Among this
group, 78% are on Facebook, 51% are on MySpace, and 16% are on LinkedIn.
Based on consumers’ level of participation in social networks and the persuasiveness of those engaged, nearly every brand should develop a social network strategy.
- More than three-quarters of Joiners visit Facebook regularly, but LinkedIn members are the most affluent.
- Social networks are an ideal way to spark word of mouth, since Joiners are more likely to spread product opinions and counsel friends and family before they make a purchase.
- While Facebook dominates this space, MySpace is still effective for entertainment brands, and LinkedIn can help you reach high-income professionals.
- Interactive marketers should check out and connect with existing fan pages and groups before launching their own.
Technorati Tags: Facebook, LinkedIn, MySpace, social-media, social-networks
Much of the growth in social networks is coming from people older than 34 and even a majority of online boomers now use them.
Excerpted from The Broad Reach if Social Technologies by Sean Corcoran
Social technologies continue to grow substantially in 2009. Now more than four in five US online adults use social media at least once a month, and half participate in social networks like Facebook. While young people continue to march toward almost universal adoption of social applications, the most rapid growth occurred among consumers 35 and older.
Social media can no longer be dismissed as a quirky habit of young adults.
Adults younger than 35 approached universal social participation. As we noted last year, adults ages 18 to 24 and those ages 25 to 34 adopt social media similarly. Only three percent of 18- to 24-year-olds and 10% of 25- to 34-year-olds are socially Inactive. What’s more, a staggering 89% of the younger crowd are Spectators, while nearly as many are Joiners. And almost half create content, far higher than any other age group. Adults ages 25 to 34 also grew their participation across all categories — especially in social networks.
- Adults ages 35 to 54 rapidly adopted Joiner activities. Much of the growth in social networks today comes from people older than 34. Compared with last year, this group grew its participation by more than 60%, and now more than half of adults ages 35 to 44 are in social networks. Adults ages 45 to 54 grew their Joiner behavior nearly as much, but still lag behind the 35- to 44-year-olds; 38% of those ages 45 to 54 use social network sites regularly. These consumers also increased their Creator activities to the point where one in five produce social content.
- Adults 55 and older started to share and connect with each other online. Seventy percent of online adults ages 55 and older tell us they tap social tools at least once a month; 26% use social networks and 12% create social content.
Technorati Tags: Facebook, social-media, social-networks, Twitter
A new Working Paper* published by Harvard Business School tries to answer the question of whether friends influence purchasing activity in social networks such as Facebook and comes up with a mixed answer.
Moderately connected users show a 5% increase in revenue due to social influence. However, high status, heavily connected users’ revenue declines by almost 14% due to these social effects.
This is consistent with the typical fashion cycle wherein opinion leaders or the elite in the fashion industry tend to abandon one type of fashion and adopt the next in order to differentiate themselves from the masses.
The paper’s results show three distinct user groups: a) Low status members (48% in the sample), who are not well connected to other members, experience little or no social effect and hence do not change their purchase patterns due to friends’ purchase behavior, b) Middle status members (40% in the sample), who are moderately connected, and show a strong positive effect when their
friends buy items and c) High status members (12% in our sample), who are the most well connected, but show a negative social effect.
“To understand how members strive for differentiation, we linked the purchase related activity of members with their non-purchase related activity. The group with negligible contagion effect contained members who are not well connected to other members as well as show little non-purchase related activity. The group with positive contagion effect constitutes members who exhibit a moderate level of non-purchase activity. They try to maintain their status by primarily making purchases as they fear that not doing so might undo their status. This is the typical ‘keeping up with the Joneses’ effect.”
“Finally, the group with negative effect contains well connected, high status members. These members show a very high level of non-purchase activity and their probability of purchase is lowered if other members around them are purchasing. This is consistent with the typical fashion cycle wherein opinion leaders or the elite in the fashion industry tend to abandon one type of fashion and adopt the next in order to differentiate themselves from the masses. As other members around them imitate their purchases to gain status, these high status members further differentiate themselves by pursuing non-purchase related activity.”
We also quantify the social influence in terms of changes in purchase probability and revenues. Our results show that middle-status users show, on average, a 5% increase in revenue due to social influence. In contrast, the high status group’s revenue declines by almost 14% due to these social effects.
“Our findings are relevant for social networking sites and large advertisers. The members in high status group have an influence on those in the middle status group for the diffusion of a new product. However, a successful diffusion in the middle status segment may make high status members lose interest in the new product.”
Do Friends Influence Purchases in a Social Network?
Raghuram Iyengar, Sangman Han, Sunil Gupta
Technorati Tags: advertizing, Facebook, purchasing, social-networks
Marketing, eCommerce, CRM, and advertising will be transformed by social networks over the next five years as new technology provides consumers with portable online identities, according to Forrrester Research. In The Future of the Social Web, Forrester analyst Jeremiah Owyang writes that social experience is disjointed because consumers have separate identities in each social network they visit.
“The Social Web is about to evolve into something much broader than a few social network sites: a consistent backdrop for every online activity. Portable social IDs and the changes they enable will transform how consumers, brands, and social networks interact. This online social experience will evolve through five eras.”
A simple set of technologies that enable a portable identity will soon empower consumers to bring their identities with them — transforming marketing, eCommerce, CRM, and advertising.
- The era of social relationships. This was the first stage of the Social Web, starting in the mid- 1990s with communities like AOL and maturing a few years ago. In this era, people connected to each other using simple profiles and friending features to share information, discussions, and media.
- The era of social functionality. Today’s social networks have evolved beyond “friending” into
platforms that support social interactive applications and provide new meaning and utility to
communities. Even so, social relationships are still locked up within sites.
- The era of social colonization. In the next stage of social evolution, starting later in 2009,
technologies like OpenID and Facebook Connect will let individuals traverse the Internet with
their social connections along for the ride. The boundaries of social networks and traditional
sites will blur, making every Web site into a social experience.4
- The era of social context. Next year, as sites begin to recognize people’s personal identities and their social relationships, they will customize visitors’ experiences based on their preferences, their behaviors, and who their friends are. In addition to enabling more intense social applications, in this stage social networks will absorb features of email and become a base of operations for everyone’s online experiences.
- The era of social commerce. Starting about two years from now, as social networks become the repository for identities and relationships, they will become more powerful than corporate Websites and CRM systems. Communities will become the driving force for innovation. As a result, brands will cater to communities, resulting in a power shift toward the connected customer.
destinationCRM.com provides more detail on the report, including an interview with the author. The full report is available here.
Technorati Tags: advertising, brands, CRM, eCommerce, social-networks
Adoption of Web 2.0 tools by US companies continues to grow rapidly as they get more familiar and comfortable with blogs, wikis, RSS feeds, podcasts and social networks. And McKinsey’s second annual survey on the topic finds that companies are using the tools for higher-value purposes.
Some 21 percent of the respondents are very satisfied with the way their companies use Web 2.0 tools, which are changing management practices and even organizational structures.
Other companies report that the barriers to adopting Web 2.0 tools include management’s inability to grasp their potential financial returns, unresponsive corporate cultures, and less-than-enthusiastic leadership.
Satisfied or not, all companies surveyed plan to spend more on Web.2.0 applications.
Technorati Tags: social-networks, Web-2.0
Companies with a board member who has prior LBO experience are much more likely to receive a private equity offer, according to a new working paper.* The paper examines the propensity for U.S. public companies to become targets for private equity-backed, take-private transactions.
Looking at 483 private equity-backed deals in the 2000-2007 period relative to public companies the paper finds that, in addition to the financial drivers studied in previous works, board characteristics and director networks are also associated with deal generation.
We find that a company that has a director who has had LBO experience through prior board service is ~40% more likely to receive a private equity offer and that the strength of this effect varies with the influence of the director and the quality of the prior LBO experience.
The paper’s findings support the idea that directors and social networks play an influential role in change-of-control transactions.
* Board Interlocks and the Propensity to be Targeted in Private Equity Transactions – by Toby Stuart and Soojin Yim.
Technorati Tags: LBO, private-equity, social-networks
Forrester Research gives most companies a failing grade in an assessment of their social network marketing initiatives.
Forrester applied its Social Network Marketing Review methodology to programs run by 16 firms in four industries: automotive, media, technology, and consumer products.
Only the BMW Series 1 received a passing grade, and half of the firms scored a zero or lower.
But even with these dismal overall results, Forrester found examples of specific best practices: The Dell/Microsoft (Red) program provided a rich media theme that was easily sharable, Sony’s BMG page for Alicia Keys was personable and interactive, and Kraft’s DiGiorno Pizza delivered a unique interactive experience with its members.
Forrester said many programs fell short in three major aspects:
- Marketing programs were not self-fueling. For interactive marketers, social networks offer the promise of rapid word of mouth through an engaged community. But 13 of the 16 brands failed to offer elements like member-created quizzes, social games, or any of the other nearly limitless ways for members to self-express. As a result, most of these marketing efforts require constant attention by firms, which must create content, media, or advertisements in order to keep their programs afloat.
- Marketing efforts do not encourage members to participate among themselves. Member-to-member discussions are a hallmark of social networks, but most brands failed to capitalize on this dynamic. Once again, 13 out of 16 firms failed this test by delivering marketing efforts that didn’t encourage member interactions like contributing comments and voting.
- Companies failed to participate in their own communities. Most companies showed little sign of life, sending their interactive marketing programs live, and then not showing up to welcome, listen to, or otherwise support community members
To improve social network marketing, brands must develop community-centered content and activities, measure success based on new criteria, and be prepared to participate, Forrester says.
More details are available in Best And Worst Of Social Network Marketing, 2008.
Technorati Tags: automotive, consumer-products, Media, online-advertising, online-marketing, social-networks, technology
Online retailers are eager to experiment with Social Computing this year, according to Forrester Research. However, Forrester advises against “reckless or experimental spending” on customer acquisition and on social networking.
Social Computing efforts continue to be largely experimental with little correlation to sales.
Therefore, online marketers are better off using core tactics like email, Forrester says in The State of Retailing Online 2008: Marketing.
The report finds that with the exception of the travel industry, US online retailers are continuing to grow at a significant pace, even as they swim against the current of a worsening economy. US online retail activity this year is expected to increase to 7% of all US retail sales from 6% last year. In a separate eCommerce Forecast Forrester projects 10.7% of all retail sales will be transacted online by 2012.
The same five categories that drove nearly 50% of all online retail activity are expected to continued to dominate this year. High-ticket durables, computer products and clothing products are the most important sectors.
Online retailers are focussing much of their marketing energy on direct mail campaigns, Forrester says.
Indeed, online retailers in general show a considerably stronger predilection towards metrics-driven marketing — that is highly targeted campaigns — than traditional retailers. To that end, paid placement on search engines is the single most popular online advertising tactic.
Technorati Tags: online-shopping, social-networks
Visitors to Research Recap this week were most interested in the historical perspective. Top post of the week was Oxford Analytica’s History Suggests a Downturn but No Depression, which found striking similarities between the current economic situation and and the 1937 downturn.
An oldie but goodie re-entered the charts this week, the International Monetary Fund paper from December Role of Hedge Funds in Subprime Crisis Examined.
Forrester Research’s Social Networks Well Suited to Automaker Online Marketing was also popular, looking at the varying levels of online social networking activity among owners of different car brands.
SWFs remained in the spotlight through Sovereign Wealth Funds Assets up 18% in 2007 from International Financial Services London, as did private equity, despite the challenging environment, in the Dow Jones VentureWire report US Private Equity Funds Raised up 32% in Q1.
Technorati Tags: economy, Hedge-Funds, private-equity, social-networks, SWF, Zeitgeist
In the wake of GM’s decision to move half of its $3 billion marketing budget into digital in the next three years, Forrester Research takes a look at the use of social networking applications by owners of different car brands. The results are some useful insights into how car companies should pursue their online advertising strategie.
Some of their findings include:
- Mazda, Honda, Pontiac, Hyundai, and Jeep owners are the most active. These
brands have proportionally more young customers than most of the other brands.
- Chrysler, Toyota, Dodge, Buick, Subaru, and Saturn fall in the middle.
- Ford, Nissan, Chevrolet, GMC, and Mercury owners are touched least by social media, partly because they attract older consumers. Even so, many of their owners are still active in some form of online social behavior.
Forrester says blogs are an important way for companies to tap into their more interested customer base: GM, for instance, “has used its blog to promote all its activities, including new models and concept cars from Buick and Saturn. Chrysler has a similar blog for its brands and also features a YouTube channel with more than 100 videos. These activities can help energize enthusiast “Creators” in the blog community, which will in turn reach the masses of “Spectators” in their customer bases.”
The report recommends several marketing strategies specifically for car companies.
- Generating word-of-mouth among their own customers.
- Creating social sites that encourage aspiration.
- Noticing trends in the social sphere before they appear in the real world.
Meanwhile, comScore finds that more than a quarter of all online auto insurance quotes were referred by a search engine. According to the comScore study, the number of search-referred quotes grew to 8.9 million in 2007, a 36-percent increase versus the previous year. “This is particularly impressive when compared to the 15-percent overall growth in the number of online auto insurance quotes requested in 2007,” comScore said.
Technorati Tags: automotive, Insurance, online-marketing, search, social-networks
